Journal of Economics and Financial Analysis, 1 (2), pp. 49-69, [2017]

The Long-Term Impact of Educational and Health Spending on Unemployment Rates



This study used panel data regression analysis to evaluate the long-term effects of several measures of U.S. education expenditure on unemployment rates in 50 states and Washington D.C. over 25 years. The data included state-level statistics for fiscal effort, graduation rates, education spending per pupil, gross state product per capita, welfare spending, health spending, political party affiliation, union versus nonunion states, and unemployment rates. Results find that the best way to effectively reduce unemployment is investment in improving the quality of human capital through funding education. Findings specifically conclude that over the long term, investment in human capital through education as defined by per-pupil spending and health services could play a significant role in reducing unemployment rates.


Educational Spending; Health Spending; Unemployment Rate; USA.

JEL Classification

E24, I18, I28.

Full Text:


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